Leslin K Seemon
| 1455 views | 6 min read
In a country as diverse and complex as India, tackling socio-economic issues is a monumental task. While government schemes and NGOs do their part, the real change often starts at the grassroots level. In this blog, well cover -
Self Help Groups (SHGs) are small voluntary associations of people, often from similar socio-economic backgrounds. They gather every week, pooling in small amounts of money, discussing community issues, and planning collective actions.
As of 2020, India is home to over 12 million SHGs, impacting approximately 100 million families. These aren't just numbers; they're a testament to the transformative power of collective action.
The concept of SHGs isn't new. It traces its roots back to the co-operative movements of the early 20th century.
1950s-1960s: The Co-operative Movement
Co-operative societies were among the earliest forms of collective financial activities in India, laying the groundwork for future community-based initiatives.
1970s: The Birth of Informal Groups
Informal savings and credit groups began to form, especially in southern India, as a way for communities to pool resources.
1980s: The MYRADA Influence
MYRADA, an NGO, started promoting savings and credit groups in Karnataka, which later evolved into the SHG model we know today.
1992: NABARD's SHG-Bank Linkage Program
NABARD (National Bank for Agriculture and Rural Development) launched the SHG-Bank Linkage Program, aiming to link SHGs with formal banking systems for better financial inclusion.
1999: Introduction of SGSY
The Swarnajayanti Gram Swarozgar Yojana (SGSY) was launched by the Indian government to promote income-generating activities among SHGs.
Early 2000s: Focus on Women Empowerment
SHGs started focusing more on women's empowerment, leading to the formation of women-centric SHGs across the country.
2007: NRLM Framework
The National Rural Livelihoods Mission (NRLM) was formulated, providing an institutional framework for SHGs and promoting skill development and employment.
2011: Launch of Aajeevika
Aajeevika, a sub-scheme under NRLM, was launched to enhance the livelihoods of SHG members through better market linkages and skill development.
2015: Digital Financial Services
Introduction of digital financial services for SHGs, making financial transactions more transparent and efficient.
2018: Expansion to Urban Areas
The National Urban Livelihoods Mission (NULM) was launched to replicate the SHG model in urban settings.
2020: COVID-19 and SHGs
SHGs played a crucial role during the COVID-19 pandemic, from making masks and sanitizers to creating awareness about health protocols.
2021: Focus on Sustainable Livelihoods
Recent initiatives aim to link SHGs with sustainable agricultural practices and climate-resilient livelihoods.
SHGs aren't static; they evolve. Once stable, they move to capital accumulation and lending. The final stage is diversification into social enterprises, a stage nearly 60% of SHGs reach within five years of formation.
The SHG model in India has found admirers globally, and several countries are exploring the viability of replicating this framework. Interestingly, the SHG model has even made its way into academic curricula, demonstrating its importance in community development and financial inclusion.
While savings and credit activities are the backbone of SHGs, their role isn't confined to finance. They're also involved in skill development and social welfare activities. In fact, SHGs have mobilised over $2 billion in savings as of 2020. But more importantly, they've become platforms for education, healthcare, and even political participation.
Besides their role in financial activities, SHGs have also ventured into community policing in some areas. The members of SHGs often act as the eyes and ears of the community, helping to maintain law and order. This auxiliary role emphasises the multi-dimensional utility of SHGs in modern India.
Navigating Credit Risk Assessment in SHG Loans
Why do we need SHGs when we have banks and other financial institutions? The answer lies in accessibility. A staggering 40% of India's population doesn't have access to formal financial services. SHGs fill this void, especially in rural areas, acting as a bridge to formal financial systems.
SHGs have a unique advantage of local understanding, which conventional banking institutions often lack. This enables SHGs to offer micro-credits at favorable terms, tailored specifically to the community’s needs. This community-centric approach makes SHGs an indispensable tool for rural development.
The advantages of SHGs are manifold. Financial inclusion is just the tip of the iceberg. They're instrumental in women's empowerment, skill development, and community building. Women constitute over 80% of SHG members in India, gaining not just financial independence but also a voice in their communities.
The role of SHGs in disaster management should not be overlooked. In regions prone to natural calamities, SHGs have been pivotal in organizing community-based disaster relief efforts, thereby adding another layer to their multifaceted impact.
The Pivotal Role of SHGs in women empowerement
However, it's not all smooth sailing. SHGs face challenges such as lack of education among members, inefficient management, and limited access to markets. Only 20% of SHGs are linked to markets for their products, a gap that needs to be addressed for sustainable growth.
Another challenge that SHGs face is the digital divide. With the world moving towards digital transactions, the lack of technological access and know-how can be a barrier for SHGs, particularly those in remote areas.
How SHGs operate : A closer look
There are over 2,000 SHGs focused solely on organic farming, a niche yet growing sector. A few notables one are -
Focus: Women Empowerment, Food Processing
Impact: Started by seven women in 1959, Lijjat Papad has now become a household name. It empowers women by providing them with employment opportunities in papad making.
Focus: Women Empowerment, Microfinance, Agriculture
Impact: Kudumbashree is one of the largest women-empowering projects in India. It has successfully uplifted thousands of women by providing them with income-generating opportunities.
SEWA (Self Employed Women's Association) - Gujarat
Focus: Women Empowerment, Labor Rights
Impact: SEWA has been instrumental in organising women workers in the informal sector. It has more than 1.9 million members and has set an example in collective bargaining.
Apart from the ones mentioned, there are SHGs that focus on renewable energy solutions like solar lanterns, clean cooking stoves, etc., enhancing not just livelihoods but also contributing to environmental sustainability.
The story of Self Help Groups (SHGs) in India is an inspiring one, showcasing the strength of community-based systems. As we move into a future where sustainability and local empowerment are key, the role of SHGs is bound to evolve, adapt, and expand. Whether it's through digital inclusion or linking with global markets, SHGs are here to stay, continuing to shape India's socio-economic landscape.
Reference reads :
SHGs boositing houselhold incomes women-led self-help groups (SHG) disbursing billions
